There will be no easy fixes at Cathay Pacific. The airline not only faces intense competition from low-cost airlines, but also from full-service carriers in China and the Middle East. Fares have been falling for years in many of its markets. In many city-pairs, there is too much capacity.

— Brian Sumers

Share

Tweet

Share

Post

Send

Cathay Pacific Airways Ltd.’s operating environment remained challenging in the first half of the year, Chief Executive Officer Rupert Hogg said, dashing expectations of an early recovery for the carrier that’s cutting jobs following the first annual loss in eight years.

“We said that we expected the operating environment in 2017 to remain challenging,” Hogg said in a statement the premium airline sent to the stock exchange Tuesday. “This has been the case. Our airline’s performance in the first half of 2017 continued to be disappointing.”

Hogg said strong competition from other airlines is putting “intense and increasing pressure” on passenger yield, or the money an airline gets from carrying a passenger for a kilometer. The company’s annual passenger yield fell to the lowest level in seven years in 2016.

The carrier is scheduled to announce its first-half earnings mid-August.

Hogg took over as the airline’s chief in May, facing one of the toughest turnaround jobs in Asian commercial aviation. Once a dominant player in Asia’s premium air travel market with few serious rivals, Cathay Pacific has hit an air pocket, despite the booming travel demand in the region.

Cathay Pacific is expected to report a full-year loss of HK$1.44 billion ($185 million) this year, according to the average estimate of 18 analysts compiled by Bloomberg. Hong Kong’s Swire Group owns 45 percent of Cathay Pacific.

Another Swire unit warned of deterioration in performance. Hong Kong Aircraft Engineering Co., 75-percent owned by Swire, told the stock exchange Tuesday that it expects bigger losses at its U.S. operations. As a result, the company’s earnings before exceptional items for this year is set to be worse than 2016, it said. In 2016, the U.S. unit had a loss of HK$238 million, excluding impairment charges.